What is customer satisfaction, and why bother tracking it?

In today’s ultra-competitive market, acquiring a customer costs up to five times more than retaining them. This is where customer satisfaction plays a huge role as a happy customer becomes a loyal one; they will return, spend more, recommend you, and remain committed to your company. In this article, Partoo explains the ins and outs of customer satisfaction and why you should master the metrics.

Customer satisfaction KPIs 

Customer satisfaction measures how well your offer (product or service) matches customer expectations. It focuses on the gap between their needs and what you offer. If you exceed their expectations, customers will return; if not, they’ll use the competition. 

In other words, if they’re happy, you’ll retain them, while if they’re not, you can kiss them goodbye.

There are several key performance indicators (KPIs) that track customer satisfaction rates, with NPS and CSAT among the most popular.

KPI #1: Net Promoter Score (NPS)

The NPS measures how likely customers are to recommend a brand, product, or service. It goes beyond a simple transaction; it measures a customer’s emotional engagement and their overall relationship with a brand. This KPI tracks how customer loyalty changes over time.

You’ve probably already answered a question along the lines of “On a scale of 0 to 10, how likely are you to recommend this company, product, or service to a friend or colleague?” It was an NPS-type question.

Respondents are classified into three categories depending on their reply, as shown in the table below:

Thanks to a simple calculation, NPS lets you evaluate customer satisfaction and loyalty at a given time and monitor how their relationship with the brand changes.

The calculation used is as follows:

NPS = % of promoters – % of detractors

NPS scores may differ by country and sector (due to different expectations and scoring methods).

The table below illustrates the differences between various sectors. Sectors where purchases are complex or occasional (such as banking and insurance) often have a lower NPS. On the other hand, NPS scores may be higher in high-touch and service-intensive sectors such as luxury and retail. 

KPI #2: Customer Satisfaction Score (CSAT) 

The Customer Satisfaction Score measures how happy a customer is immediately after an interaction, such as the in-store welcome or a purchase. It’s more direct than NPS; it targets a specific moment by asking questions such as “How do you rate the in-store welcome on a scale of 1 to 5 (or 1 to 10) where 1=very dissatisfied and 5 = very satisfied?” 

The CSAT calculation used is as follows: 

CSAT = (number of positive responses / total number of responses) * 100 

The CSAT lets you quickly identify pain points in the customer journey and evaluate the performance of specific interactions.

These two KPIs work in tandem, letting you track your establishments at an overall and specific level.

Other valuable customer satisfaction KPIs

Although less common, these KPIs are also a useful way to track customer satisfaction: 

• The Customer Life Value (CLV) is the total profit a business earns from a customer over their average lifetime.
• The Customer Effort Score (CES) measures the effort that the customer must make to complete a task or solve a problem with a company. It highlights paint points in the customer journey and helps simplify processes to improve the overall customer experience. It can be monitored with questions of the “How hard was it to…?” sort.

Although less common, these KPIs are also a useful way to track customer satisfaction: 

• The Customer Life Value (CLV) is the total profit a business earns from a customer over their average lifetime.
• The Customer Effort Score (CES) measures the effort that the customer must make to complete a task or solve a problem with a company. It highlights paint points in the customer journey and helps simplify processes to improve the overall customer experience. It can be monitored with questions of the “How hard was it to…?” sort.

Why measure customer satisfaction? 

Measuring customer satisfaction is a strategic tool to turn customer feedback into actionable ways to improve performance. Tracking it means you can:

Improve your customer satisfaction rates with Partoo’s Feedback Management

Customer satisfaction is more than a score or rating; it shows how well a business meets customer expectations, anticipates their needs, and forges lasting relationships.

Turn customer satisfaction into a lever to boost your performance!

An all-in-one tool that allows you to:

• Collect data efficiently
• Centralise feedback and respond
• Analyse and monitor your performance

Request a demo

Partoo’s Feedback Management lets you collect, centralise, and analyse all your customer satisfaction data. Thanks to its clear, intuitive dashboard, companies can easily manage their various key performance indicators (KPIs).